When working with new trade clients on their wealth protection a common theme is the client believes the following two things;
- “I am already covered if anything should happen to me”
- “Nothing will happen to me”
“She’ll be right” is a very well known Australia saying. I’m not sure who she is but she will be alright!
I believe that the “she’ll be right” mentality is often used by young tradies when they are asked to consider protecting their financial future
The reality of the situation in Australia is that most of the country is under-insured, with people not having enough cover to support them financially in a time of need or assuming that the type of insurance is going to pay them out. In addition to this a lot of people think that nothing will happen to them and insurance isn’t required. I would encourage any person that believes this to take the reality check from TAL. This online assessment will show you statistics on how much money the insurer has paid in regards to which injuries and illness have occurred from someone in your age group. CLICK HERE to do this 2-minute assessment.
When working with a client that hasn’t used a financial adviser in the past we find that if they do have any policies in place, generally it has been purchased direct from either the telephone or the internet or included with their CBUS Super Fund. After recently attending a training day with TAL thanks to an invite from Angelo Porcaro. I was alarmed at some of the following stats between direct insurance and advised insurance. Here are some of the key things you will need to address for your situation;
Low sums insured
The table below highlights the average sum insured/benefit amount payable on a claim from direct or advised
|Critical Illness / Trauma||$182,387||$67,018|
|Total and permanent disability||$271,546||$105,513|
This highlights that if you have the “SHE’LL BE RIGHT” mentality with your insurance, there is a risk that you may have not purchased enough cover and therefore you’ll be left uninsured.
Direct designed for high acceptance or decline
Direct insurance is designed for high acceptance or decline, this means that no medicals are requirement to put the policy in force and the policy is generally underwritten at the time of claim, which isn’t giving you the best peace of mind on your policy.
Advised insurance is design to work face to face with the customer in order to gain a full financial snapshot of a client’s situation. This means that the adviser is able to recommend the correct levels of insurance cover based on your lifestyle. With advised insurance the adviser works on your behalf to get the policy in force. You insurance is underwritten before the policy goes into force giving you more peace of mind that you will receive your claim if required.
Probably the biggest take out from looking at the differences between direct insurance and advised insurance is the cost comparison between the two. The charts below have been taken from TAL.
The chart show that direct insurance can be up to 180% more expensive than most advised based insurance products
So, I challenge anyone with the “SHE’LL BE RIGHT” mentality to address their situation in order to protect themselves and also their families’ financial future.
Disclaimer: This blog has been written in a general nature and isn’t based on your personal circumstances. You should consider you personal situation before making any changes.